background background background

Crypto exchanges decline request to freeze Russian funds

Picture of Anders Nysteen
Anders Nysteen

Senior Quantitative Analyst, Saxo Bank

Summary:  Crypto exchanges are seeing record-high ruble trading volumes, while major exchanges are declining a proposal from a Ukraine official to freeze crypto accounts related to Russia.


With the Russian ruble plummeting against the US dollar and the Euro, investments into cryptocurrencies seem to be an increasingly popular alternative to the ruble. According to a report by CoinShares, crypto exchanges with ruble trading saw volumes soaring by 121% over the past week, and the world’s largest crypto exchange, Binance, show record-high trading volumes in USDT/RUB over the weekend – see chart below. USDT (also know as Tether) is a stablecoin which aims to keep the cryptocurrency valuation stable to the US dollar.

The rising volumes may likely raise concerns whether cryptocurrencies can be used by Russia to get around some of the economic sanctions imposed on the country. The president of the European Central Bank, Christine Lagarde, hinted to this during an informal meeting on Friday, where she in a response to a question on Russia potentially using crypto to evade sanctions, replied that the currently proposed framework on regulating digital assets in EU should be pushed through as quickly as possible.

Official in Ukraine calling for a block of Russian crypto users

On Sunday, the Minister of Digital Transformation of Ukraine urged global cryptocurrency exchanges to block all accounts belonging to Russian nationals. According to estimates, Russian citizens own around USD 200 bn worth of cryptos according to numbers from early February.

Binance was the first crypto exchange to decline the request stating that they are “not going to unilaterally freeze millions of innocent users' accounts. Crypto was meant to provide greater financial freedom for people across the globe.". They will, however, be “… blocking accounts of those on the sanctions list … and ensuring that all sanctions are met in full” [source: Reuters]. Two other major cryptoexchanges, Coinbase Global Inc. and Kraken, also declined the request from Ukraine. The CEO of Kraken stated on Twitter that the company “cannot freeze the accounts of our Russian clients without a legal requirement to do so”. If the global regulators become too afraid of crypto as a medium to bypass some of the economic sanctions, the exchanges may be forced to deviate from some of their core crypto values.

01_ANNY_1
Source: Binance. Bottom plot shows the daily traded volume over the past couple of weeks.

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
Full disclaimer (https://www.home.saxo/legal/disclaimer/saxo-disclaimer)
Full disclaimer (https://www.home.saxo/legal/saxoselect-disclaimer/disclaimer)

Saxo Bank A/S (Headquarters)
Philip Heymans Alle 15
2900
Hellerup
Denmark

Contact Saxo

Select region

International
International

Trade responsibly
All trading carries risk. Read more. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more

This website can be accessed worldwide however the information on the website is related to Saxo Bank A/S and is not specific to any entity of Saxo Bank Group. All clients will directly engage with Saxo Bank A/S and all client agreements will be entered into with Saxo Bank A/S and thus governed by Danish Law.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.